For the country’s auto industry to thrive, there is the need for a creative finance model.The need for transformative change in the current car financing will be greater as they explore entirely new business models and capabilities as required for commercial finance.

The auto industry as a consumer-facing business is as dependent on well-functioning and widely available financing as any other retail businesses across the globe. Many a country has jettisoned outright purchase of cars over the decades as it is never a tenable option for any individual to commit a large sum of money to own a car. Like house financing, car mortgaging has become the new and sustainable wave of vehicle ownership across efficient global economies.

Manager, Marketing, Dana Motors Limited, Olawale Jimoh, revealed this as part of excerpts from a special report by The Guardian, ‘Financing the economy’, a compendium of roles of strategic players in the Nigerian economic sector. Jimoh said the auto industry is currently gasping for breath as a result of the slow-paced economic recovery and ever-decreasing buying power of the consumers, and to provide a great leap in the survival of this sector, affordable car financing and favourable monetary policies are apparently the only go-to options for all stakeholders.

He stressed the need to rebalance the business, dialling back capabilities and investment in consumer markets and ramping it up, along with associated capabilities, in commercial ones.This he noted implies differing levels of effort for different auto finance players. For large diversified banks, it may “simply” be a matter of shifting business from one division (retail/commercial auto lending) to another (auto company financing in opening Letters of Credit (LCs) and operational loans).

According to him, the first step in the auto finance value chain is finding and connecting with customers who need to borrow money to make their purchase, and make it as accessible as the current wave of payday loans.Presently, customers have rarely relished the process of initiating a loan, with its reams of paperwork and long-wait time at the banks. For us to have a diversified economy, that albatross need to change to a more inclusive value-driven business process, as auto retailers look to adopt customer-centric omni-channel retail model, by partnering with banks to provide a seamless, simpler, and smoother lending experience.

Particularly, he said the financial houses need to adopt a more creative approach in their car financing models, by shifting to a highly tailored funding experience. Auto finance companies will need to offer an origination process to match with near-instantaneous mobile loan generation, and easily accessible finance option to make owning a car a seamless process, and in turn, help increase car sales across the country thereby contributing immensely to the diversification of the nation’s economy.

Jimoh said the automotive industry is undergoing a profound and challenging phase due to high pricing, low consumer buying power, and the dearth of financing options. As an indispensable player in the industry, auto finance companies will also need to transform their business models to align with the new reality that confronts the economy.

In his words: “As with most economies coming from the heels of a recession, the role of the financial institutions in helping the country recover from the record low car sales trend has to be re-evaluated to drive more value and long-term investment. The economic recovery is likely to come slower than many imagine, hence, the stakeholders in today’s industry have an important role to play to transform and adapt, creating a sustainable and enduring financing option to the teeming consumers.”

However, he said there is no gainsaying the fact that diversification of the economy has become the new song on the lips of many stakeholders and political economists, hitherto, a sickening financial institution will forever make our dream of an industrialised economy a nightmarish one, as the role of a formidable car financing cannot be over-emphasized.